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Re: researcher59 post# 112363

Wednesday, 05/01/2024 7:20:04 PM

Wednesday, May 01, 2024 7:20:04 PM

Post# of 113229
JAZZ

Reported after the bell. The quarter was clearly a miss to analyst expectations (Basically missed by $1.50), but guidance remains the same. hence my opinion remains unchanged.

Why do I feel confident they will hit guidance for the fy if not exceed it? It really does beg the question are you just ignoring the facts that you might be wrong here. Let me explain why I feel I'm not wrong.

Well Q1 $2.68 had many moving parts. For starter q1 is seasonally weak, many of there drugs get stocked up late in the FY q3 and q4, and q1, is a working off inventory type of quarter hence that was a significant factor to top line growth of numerous drugs which will increase significantly in q2 and continued ramp throughout the year. So q1 will always be much weaker than the other quarters, so you can never annualize q1 because of it.

Revs were also affected by a huge drop in Xyrem revs, as people have switched to Xrwav, shown by a decent (As they said one time significant jump in a sequential jump in Xrwav patients. The good news is there people will be paying customers (Most likely) The bad news is to get them off Xyrem to Xrwav, is basically a 1-2 month thing, where the company basically provides free samples is my understanding from the cc. Now They generally get the insurance to cover these patients going foward (But it takes 1-2 months to make the switch/transition) so these people will be paying customers by there insurance come q2 and beyond (At least for the most part), but as a result we got a much larger drop in Xyrem revs because of this, and the Xrwav Revs Will grow significantly in q2 (But the increase in patients didn't really help q1 revs very much) and beyond sequentially, but because of the process my understanding is this was another significant headwind in q1, but with benefit in q2 and beyond as obviously JAZZ is moving the revs to Xyrev, and the royalities from the high sodium oxbate, is how they will get there revs going foward as Xyrem because much, much less important.

Furthermore SGA had some higher legal costs, and a higher bad debt expense, that they gave the idea that this stuff probably won't continue at these levels in future quarters.

Furthermore the tax rate was significantly higher for q1 than where it was and is forecasted to be. Hence that almost hit earnings for another .50 right there alone. But they indicate the tax rate remain unchanged for the year, with a timing issue hence that will help EPS in future quarters.

Furthermore I'm very excited about the pipeline. With Zantidamab more near term in fact revs might be coming in as early 2025 if we get approval if not sooner. Longer-term this drug is projected to possibly have a 2 billion+ peak potential. of course still unknown if it can get there or even approved for that matter, and with all drugs they are like prospects in baseball, but it sure does sound exciting, granted I'm no medical expert.

Furthermore on the slides they talked about fy 25. They talked about getting adjusted operating margins up 5% from fy 21 levels, which were around 43%. The are talking about being at 43% for the rest of the year, so 5% more, if they even come close, and forget the 500 million in business development revs, even if they do 4.5 billion in fy 25. Things get very exciting if they increase operating margins anywhere near that.

I still see alot of waaaaaaaaaaays to win with JAZZ here. of course i won't be surprised if it is down tomorrow possibly making a new 52 week lows, but I still think they could do close to $20 this year (Market won't probably give them the benefit of the doubt), Considering they have an impressive pipeline, and possible increase in adjusted operating margins in fy 25, combined with increased revenue growth from it's existing drugs, and possibly the introduction of a possible huge blockbuster on zantidamab, and the drop in Xyrem will start to have less effect on results to overcome as the amount of revs is getting much smaller as a part of total revs in my opinion, at a absurdly cheap valuation. Anyways time will tell, but wanted to give an update on what I thought about JAZZ, obviously the quarter on the face number was very disappointing, but there are reasonable reason for what happened here, and why they should hit guidance in FY 24, and possibly even better news in FY 25. Time will tell. All is just my opinion, and I could always be wrong though.

---All above is just my humble opinion.
And I could always be wrong.
And as always do your own DD.---
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